Are regulators the biggest fat cats on Wall Street?
The war has been going on for decades, though the fight is just now heating up. It’s bankers versus regulators: a classic case of the rich against the…slightly richer? Wait, what?
A controversial new op-ed in the Wall Street Journal, penned by Paul Kupiec, a resident scholar at the American Enterprise Institute, takes Wall Street regulators to task, mostly for the same reason the general public lashes out at bankers: they make too much damn money. Kupiec’s argument is an illuminating one, though he bobs and weaves around facts like a slalom skier.
The average compensation at three top U.S. regulatory bodies – the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC) and the Consumer Financial Protection Bureau (CFPB) – was more than $190,000 in 2012, a stunningly high number considering all the recent chatter from regulatory heads about high turnover rates. The Federal Reserve, Kupiec surmises, likely pays north of that average figure, though it doesn’t release its comp numbers.
While regulators typically employ highly trained specialists – lawyers, mostly – they also hire plenty of general staffers. Secretaries, for example, who take home an average of nearly $80k, and human resources management trainees, who earn roughly $110k at the CFPB. Around two-thirds of employees at U.S. banking regulators made six figures in 2012.
The main issue at hand is that, unlike at many other Federal bodies, the salaries of banking regulators aren’t subject to Congressional control – and most regulators’ budgets are pulled directly from the balance sheets of banks through insurance payments.
The pockets of regulators were deepened years ago to help them recruit highly-specialized, difficult-to-find talent with the knowledge and will to take on big banks. What’s happened, at least according to Kupiec, is that regulators started throwing money around in all directions – like paying drivers $82k – while failing to compensate lawyers and economists with premium wages.
While it’s an interesting take, Kupiec sullies his argument by offering up facts that belong in quotations marks, like the average banker salary falling shy of $46,000. Clearly he’s looping in local small-town tellers and the like. The average compensation for Wall Street bankers – the ones regulators dedicate most of their time to – was $360,000 in 2012, according to another government body, the New York State Controller.
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